This site uses cookies to store information on your computer. Some are essential to make our site work; others help us improve the user experience. By using the site, you consent to the placement of these cookies. Read our privacy policy to learn more.

Latest Stories

IRS Eases Extension Request Rules

A Simpler Way to File Later

emporary regulations issued under IRC section 6081 (TD
9229, 11/4/05) simplify how individuals, partnerships and others can
obtain an automatic six-month extension of time to file a number of
income tax returns with a single request. The rules also remove the
requirements for a signature and an explanation of the need for an
extension, and render the use of certain other extension forms
obsolete.

Generally, the temporary regulations are effective for certain
returns due after 2005, so CPAs need to be familiar with them this
filing season.

INDIVIDUALS The timely submission of a completed application for extension
on Form 4868, Application for Automatic Extension of Time To File
a U.S. Individual Income Tax Return, now provides an automatic
six-month extension, with no need for a signature or explanation.
(Previously, a first extension request was good for four months; a
taxpayer needed to file an additional request to gain two more
months.)

As always, the extension does not extend the time for payment of
tax. Taxpayers must make a proper estimate of any tax due. While no
tax payment is required to obtain the extension, failure to pay any
tax as of the original return due date may subject the taxpayer to
penalties and interest.

CORPORATIONS AND OTHER ENTITIES The new rules do not change the current method for filing
extensions for corporate income tax returns; rather, they broaden its
scope. The form previously used for a corporate extension (Form 7004,
Application for Automatic Extension of Time to File Corporation Income
Tax Return) will now also be used by partnerships, real estate
mortgage investment conduits, certain trusts and taxpayers requesting
additional time to file various excise, income, information and other
returns.

The regulations have changed the title and appearance of Form 7004.
Now called Application for Automatic 6-Month Extension of Time to
File Certain Business Income Tax, Information, and Other Returns,
the form will apply to a larger number of returns than did its
predecessor.

OTHER RETURNS Certain employee plan returns now are eligible for an automatic
2 12 month extension, and gift tax returns for an automatic six-month
extension, if the proper form is filed. Neither extension request
requires a reason or a signature. Donors who do not need an income tax
filing extension will use a new version of Form 8892, Payment of
Gift/GST Tax and/or Application for Extension of Time to File Form
709, to request the gift tax extension.

TRANSITION RULE The temporary regulations are effective for applications for an
automatic extension to file certain returns filed after 2005, and
accordingly, apply to applications for extension to file tax-year 2005
returns. The new rules also apply to extension applications for
tax-year 2004 returns for certain fiscal-year taxpayers whose returns
are due after 2005. Although such taxpayers should continue to use the
tax-year 2004 extension forms, the regulations’ preamble notes that
the IRS will grant a six-month filing extension if the request made on
one of these forms would otherwise qualify under the temporary
regulations, except for use of the specified form.

For more information, see Shin, Tax Clinic, “Temp. Regs. Streamline
Automatic Extension Procedures,” in the February 2006 issue of The
Tax Adviser.

—Lesli S. Laffie, editor The Tax Adviser

Notice to Readers:
Members of the AICPA tax section may subscribe to
The Tax Adviser at a reduced price. Contact Judy
Smith at 202-434-9270 for a subscription to the magazine or to
become a member of the tax section.

There are over 30 million small businesses in the U.S., and many of them are optimistic in their outlook. Are you familiar with the obstacles and opportunities they are facing? Test your small business acumen with this quiz sponsored by Chase Ink®.